Tuesday May 5 1997. It was the first full working day in power for the new Labour government following the bank holiday weekend and Gordon Brown was about to make sure Tony Blair's administration got off with a bang.

Standing behind a specially prepared podium in the Treasury's first-floor conference room, Labour's first chancellor since Denis Healey had two announcements to make. The first was that he had decided to put up interest rates by 0.25 percentage points. This though, was dwarfed by Brown's second piece of news - that this would be the last time he would ever have any say over interest-rate decisions, henceforth the preserve of an independent Bank of England.

There are two ways of looking at the economic record of the government in the subsequent decade. One is that Brown's decision to take the politics out of monetary policy was the key to an unrivalled period of stability for Britain, the moment the sun dawned on a golden age of strong growth, low unemployment and rising prosperity after 18 years of Tory boom and bust.

Another is that it was downhill all the way from May 1997, and that as Brown prepares to make the short journey from 11 to 10 Downing Street he leaves behind an economy where the surface glitter disguises some familiar and deep-rooted problems.

Over the next week, we will take a look at Labour's record, taking the temperature in Bracknell, Paisley, Sheffield, Merthyr Tydfill, the City of London and the Lake District to see what has happened to jobs, the housing market, the financial sector and manufacturing.

Politically, Brown's record speaks for itself. When he was applauded into the Treasury on May 2, the blueprint for Bank independence up his sleeve, the shadow chancellor was Kenneth Clarke. George Osborne is the seventh Conservative front-bencher who has tried to land blows on Brown; thus far, only Michael Howard managed to give the chancellor a real run for his money, and even that was more due to his debating skills than to the nature of his critique.

As a result, the economic debate has been framed on Brown's terms. He used tough macro-economic decisions in his first term - a hugely unpopular policy to stick to Clarke's pledge to freeze expenditure for two years - to win the argument that higher public spending backed by higher taxes was needed for Britain's long-term future. In the 2001 and 2005 general elections Labour's strategy was to challenge the Conservatives to reveal by how much they would cut public spending to finance tax cuts. The role-reversal since Labour's mauling by Margaret Thatcher was complete.

Brown's other big political success has been to banish the notion that Labour could not be trusted to run the economy. There has been no run on the pound, no humiliating defeat at the hands of the financial markets, no Black Wednesday, no recourse to a bail-out from the International Monetary Fund. Indeed, the UK has become something of a poster child as far as the IMF is concerned, with the latest health check on the UK economy describing its performance as "impressive". Britain, for so often the country most likely to catch a cold if the global economy sneezed, was now flexible enough to cope with the pressures of globalisation.

The Paris-based Organisation for Economic Cooperation and Development (OECD) agrees. Its chief economist, Jean-Philippe Cotis, described Britain as a "goldilocks" economy - getting the balance of strong growth and low inflation just right. "It is in fact surprising how stable the UK economy has been. It is doing very well."

Unsurprisingly, Brown believes the OECD and the IMF have proved excellent judges of the UK economy, and on past form he will devote the first chunk of his valedictory budget speech to a paean of self-praise. In last year's pre-budget report, for example, he said: "I can report not only the longest period of sustained growth in our history, but of all the major economies - America, France, Germany, Japan - Britain has enjoyed the longest postwar period of continuous growth."

The headline numbers do look impressive. Brown set an inflation target for the Bank to meet, allowing a one percentage point deviation on either side before the governor would have to write an explanatory letter. It has not yet been necessary to put pen to paper. Unemployment is lower than when Labour came to power: the number of people out of work and claiming benefit was 1,619,000 in May 1997 but had fallen to 925,000 by the start of this year. Growth has been steady and uninterrupted, averaging 2.8% in the years from 1998 to 2006 and exhibiting none of the wild gyrations seen under the Conservatives between 1979 and 1997.

Criticism of Labour's record is threefold. Clarke, for example, says: "I passed on to Brown the strongest economy and the soundest public finances for a generation. Brown will pass on the bills of an unreformed public sector, a growing pension crisis and an increasing tax burden, which is undermining the strong economy he inherited. It remains an iron law of politics that the job of Conservative governments is to clear up the mess left by Labour governments."

A second line of attack is that the best of Labour came early - the big fall in unemployment happened in Labour's first term, while growth was on average higher in the first five years of Brown's economic stewardship than in the second five years. That criticism is linked to a third - namely that economic success has been built on rocky foundations - large dollops of private and public debt, an over-reliance on the speculative activities of the City and an excess of consumption and stagnation in manufacturing that has led to a trade deficit of record proportions.

The good news for Brown is that he will be out of the Treasury should these underlying problems come to the surface; the bad news is that as prime minister, he will still get the blame.

No change on the euro

More than seven years after the single currency was launched in the European Union, Britain joining appears as remote a possibility as ever. If Gordon Brown ceding power to the Bank of England was Labour's most momentous decision of the last 10 years, keeping the pound ran a close second.

One of the abiding images of the past decade was Charlie Whelan, then Brown's press spokesman, stepping outside the Red Lion pub opposite the Treasury to inform a bemused Tony Blair in October 1997 that Britain did not intend to join the euro in the first wave.

The chancellor deemed that although the government saw no political barrier to joining the single currency, the economic conditions had to be right. Brown set five economic tests that had to be met before the Treasury would give the go-ahead: convergence with other European countries; flexibility to cope with problems; the impact on investment and the financial sector, and whether it would boost growth, stability and employment.

Under pressure from Blair, Brown agreed to assess the five tests in 2003. Once more, his conclusion was that the economics were not right and that the Treasury would decide each year if the time was right to launch a fresh assessment.

After kicking the euro deep into the long grass, Brown has shown little desire to retrieve it, despite signs that the eurozone is emerging from the doldrums.